The Future (21 page)

One reason for the rise of the United States over its first two centuries to the preeminent position among nations was that American democracy demonstrated a genius for “seeking truth from facts.” Over time, it produced better decisions and policies to promote its national interests than the government of any other nation. The robust debate that takes place when democratic institutions are healthy and functioning well results in more creative and visionary initiatives than any other system of government has proven capable of producing.

Unfortunately, however, the U.S. no longer has a well-functioning self-government. To use a phrase common in the computer software industry, American democracy has been hacked. The United States Congress, the avatar of the democratically elected national legislatures in the modern world, is now incapable of passing laws without permission from the corporate lobbies and other special interests that control their campaign finances.

It is now common for lawyers representing
corporate lobbies to sit in the actual drafting sessions where legislation is written, and to provide the precise language for new laws intended to remove obstacles to their corporate business plans—usually by weakening provisions of existing
laws and regulations intended to protect the public interest against documented excesses and abuses. Many U.S. state legislatures often now
routinely rubber-stamp laws that have been written in their entirety by corporate lobbies.

Having served as an elected official in the federal government for the last quarter of the twentieth century, and having observed it closely before that period and since, I have felt a sense of shock and dismay at how quickly the integrity and efficacy of American democracy has nearly collapsed. There have been other periods in American history when wealth and corporate power have dominated the operations of government, but there are reasons for concern that this may be more than a cyclical phenomenon—particularly recent court decisions that institutionalize the dominance and control of wealth and corporate power.

This crippling of democracy comes at a time of sweeping and tumultuous change in the world system, when the need for U.S. advocacy of democratic principles and human values has never been greater. The crucial decisions facing the world are unlikely to be made well, or at all, without bold and creative U.S. leadership. It is therefore especially important to restore the integrity of U.S. democracy. But in order to do so, it is necessary to accurately diagnose how it went so badly off track. The shift of power from democracy to markets and corporations has a long history.

In general, political freedom and economic freedom have reinforced one another. The new paradigm born in the era of the printing press was based on the principle that individuals had dignity, and when armed with the free flow of information could best chart their own destinies in both the political and economic realms by aggregating their collective wisdom through regular elections of representatives, and through the “invisible hand” of supply and demand.

Throughout history, capitalism has been more conducive to higher levels of political and religious freedom than any other way of organizing economic activity. But internal tensions in the compound ideology of democratic capitalism have always been present and frequently difficult to reconcile. Just as America’s founders feared concentrated political power, many of them also worried about the impact on democracy of too much concentrated economic power—particularly in the form of corporations.

The
longest running corporation was created in Sweden in 1347, though the legal form did not become
common until the seventeenth
century, when the Netherlands and the
United Kingdom allowed a proliferation of corporate charters, especially for the exploitation of trade to and from their new overseas colonies. After a series of spectacular frauds and other abuses, including the
South Sea Company scandal (which gave birth to the economic concept of a “bubble”),
England banned corporations in 1720. (
The prohibition was not lifted until 1825 when the Industrial Revolution required the capitalization of railway companies and other new firms to exploit emerging technologies.)

The American revolutionaries were keenly aware of this history and originally chartered corporations mostly for
civic and charitable purposes, and only for limited periods of time. Business corporations came later, in response to the need to raise capital for industrialization.

Referring to the English experience, Thomas Jefferson wrote in a letter to U.S. Senator George Logan of Pennsylvania in 1816, “I hope we shall take warning from the example and crush in its birth the aristocracy of our monied corporations which dare already to challenge our government to a trial of strength and
bid defiance to the laws of our country.”

Between 1781 and 1790 the number of corporations
expanded by an order of magnitude, from 33 to 328. Then in 1811,
New York State enacted the first of many statutes that allowed the proliferation of corporations without specific and narrow limitations imposed by government.

So long as the vast majority of Americans lived and worked on farms, corporations remained relatively small and their impact on the conditions of labor and the quality of life was relatively limited. But during the Civil War, corporate power
increased considerably with the mobilization of Northern industry,
huge government procurement contracts, and the
building of the railroads. In the years following the war, the
corporate role in American life grew quickly, and the efforts by corporations to take control of the
decisions in Congress and state legislatures grew as well.

The tainted election of 1876 (deadlocked on election night by disputed electoral votes in the state of Florida) was, according to historians, settled in secret negotiations in which corporate
wealth and power played the decisive role, setting the stage for a period of corrupt deal making that eventually led the new president, Rutherford B. Hayes, to complain that “this is a government of the people, by the people and for the people no longer. It is a
government of corporations, by corporations, and for corporations.”

As the Industrial Revolution began to reshape America, industrial accidents became commonplace.
Between 1888 and 1908, 700,000 American workers were killed in industrial accidents—
approximately 100 every day. In addition to providing brutal working conditions, employers also held wages as low as possible. Efforts by employees to obtain relief from these abuses by organizing strikes and seeking the passage of protective legislation provoked a fierce reaction from corporate owners. Private police forces brutalized those attempting to organize labor unions and lawyers and lobbyists flooded the U.S. Capitol and state legislatures
.

When corporations began hiring lobbyists to influence the writing of laws, the initial reaction was one of disgust. In 1853, the
U.S. Supreme Court voided and made unenforceable a contingency contract involving lobbying—in part because those providing the money did so in secret. The justices concluded that such lobbying was harmful to public policy because it “tends to corrupt or contaminate, by improper influences, the integrity of our … political institutions” and “sully the purity or mislead the judgments of those to whom the high trust of legislation is confided” with “undue influences” that have “
all the injurious effects of a direct fraud on the public.”

Twenty years later, the U.S. Supreme Court addressed the question once again, invalidating contingency contracts for lobbyists with these words: “If any of the great corporations of the country were to hire adventurers who make market of themselves in this way, to procure the passage of a general law with a view to the promotion of their private interests, the moral sense of every right-minded man would instinctively denounce the employer and employed as steeped in corruption, and the employment as infamous. If the instances were numerous, open and tolerated, they would be regarded as
measuring the decay of the public morals and the degeneracy of the times.” The state of
Georgia’s new constitution explicitly banned the lobbying of legislators.

Nevertheless, the “promotion of private interests” in legislation grew by leaps and bounds as larger and larger fortunes were made during the heyday of the Industrial Revolution—and as the impact of general laws on corporate opportunities grew. During the Robber Baron era of the 1880s and 1890s, according to the definitive history by Matthew Josephson, “The halls of legislation were transformed into a mart
where the price of votes was haggled over, and laws, made to order, were bought and sold.”

It was during this corrupt era that the U.S. Supreme Court first designated corporations as “persons” entitled to some of the protections of the Fourteenth Amendment in an 1886 decision (
Santa Clara County v. Southern Pacific Railroad Company
). The decision itself, in favor of the Southern Pacific, did not actually address the subject of corporate “personhood,” but language that
some historians believe was written by Justice Stephen Field was added in the “headnotes” of the case by the
court reporter, who was the former president of a railway company. The chief justice had signaled before hearing the oral arguments that “
the court does not wish to hear argument on the question of whether … the Fourteenth Amendment … applies to these corporations.
We are all of the opinion that it does.” (This backhanded precedent for the doctrine of corporate personhood was relied upon by conservative Supreme Courts in the late twentieth century for extensions of “individual rights” to corporations—and in the
Citizens United
decision in 2010.)

This pivotal case has an interesting connection to the first nerve endings of the worldwide communications networks that later became the Global Mind. The brother of Justice Field, Cyrus Field,
laid the first transoceanic telegraph cable in 1858. A third Field brother, David (whose large campaign contributions to Abraham Lincoln had
resulted in Stephen’s appointment to the Supreme Court), happened to be in Paris with his family during the Paris Commune in 1871, and used the telegraph cable to send news of the riots, disorder, and
subsequent massacre back to the United States in real time. It was the first time in history that an overseas news event was
followed in the United States, as it unfolded, on a daily basis.

Though the Paris Commune had complex causes (including the bitter emotions surrounding the French defeat in the
Franco-Prussian War that month and the struggle between republicans and monarchists), it became the
first symbolic clash between communism and capitalism.
^†
Karl Marx had published
Das Kapital
just four years earlier and wrote
The Civil War in France
during the two months of the Commune, saying that it would be
“forever celebrated as the glorious harbinger of a new society.” A half century later, at Lenin’s funeral, his body was wrapped
in a torn and tattered red and
white flag that had been flown by Parisians during the two months of the Commune.

But as much as the Paris Commune inspired communists, it terrified elites in the United States, among them Justice Field, who was
obsessively following the daily reports from his brother and journalists in Paris. The Paris Commune received more press coverage—almost all of it hostile—
than any other story that year besides government corruption. The fear provoked by the Commune was magnified by labor unrest in the U.S., particularly by many who had arrived since the 1830s from the poorer countries of Europe in search of a better life but had been victimized by the unregulated abuses in low-wage industrial jobs. Two years later, the U.S. was plunged into a depression by the
bankruptcy of financier and railroad entrepreneur Jay Cooke. Wages fell even lower and unemployment climbed even higher.
The New York Times
warned, “There is a ‘dangerous class’ in New York, quite as much as in Paris, and they want only the
opportunity or the incentive to spread abroad the anarchy and ruin of the French Commune.”

According to historians, Justice Field was so radicalized by the Commune and what he feared were its implications for U.S. class warfare that he
decided to make it his mission to strengthen corporations. His strategy was to use the new Fourteenth Amendment, which had been designed to confer the constitutional rights of persons on the freed slaves, as a vehicle for extending the rights of persons to corporations instead.

By the last decade of the nineteenth century, concentrated corporate power had attained such a shocking degree of control over American democracy that it triggered a populist reaction. When the Industrial Revolution resulted in the mass migration of Americans from farms to cities, and public concern grew over excesses and abuses such as child labor, long working hours, low wages, dangerous work environments, and unsafe food and medicines, reformers worked within the democracy sphere to demand new government policies and protections in the marketplace.

The Progressive movement at the turn of the twentieth century began implementing new laws to rein in corporate power, including the first broad antitrust law, the Sherman Act of 1898, though the Supreme Court sharply limited its constitutionality, as it limited the application and enforcement of virtually all Progressive legislation. In 1901, after the pro-corporate president William McKinley was assassinated only six
months into his term,
Theodore Roosevelt unexpectedly became president, and the following year launched an extraordinary assault on monopolies and abuses of overbearing corporate power.

Roosevelt established the Bureau of Corporations
inside his new Department of Commerce and Labor. He launched an antitrust suit to
break up J. P. Morgan’s Northern Securities Corporation, which included
112 corporations worth a combined $571 billion (in 2012 dollars), at the beginning of the twentieth century, and was worth “
twice the total assessed value of all property in thirteen states in the southern United States.”
This was followed by forty more antitrust suits. A seemingly inexhaustible source of presidential energy, Roosevelt also passed the Pure Food and Drug Act and
protected more than 230 million acres of land, including the Grand Canyon, the Muir Woods, and the Tongass forest reserve—all while building the Panama Canal and
winning the Nobel Peace Prize for resolving the Russo-Japanese War.